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May 10, 2018

Hope order for fighter jet is actually placed, says Boeing

Boeing, which is competing with several global majors to clinch the
Indian Air Force’s order for 110 fighter jets, is investing millions of
dollars to create an ecosystem for making its product—F/A-18 Super
Hornets—in India. The US-based company hopes that the order is actually
placed, as it could otherwise derail the government’s plan of
indigenizing its defence programme.

Building a modern weapons
system like a fighter aircraft is a very complex endeavour, Boeing India
president Pratyush Kumar said in an interview.

“Firms pitching
for the product need to work for few years to build partnerships, stitch
together an ecosystem, to be able to build the product in the country.
This costs millions of dollars,” Kumar said. “Major companies (pitching
products) will be frustrated if the order does not happen, though the
actual investment will be made only after the order is in place.”

Failure
to place the order could see the collapse of various partnerships and
ecosystems set up for indigenizing the defence programme, he said.

The
Indian Air Force had in April set in motion the process of acquiring a
fleet of 110 fighter jets, one of its largest orders in recent years, to
shore up its fast-depleting squadron strength. The order for 110
fighter jets is estimated to be worth $15 billion, according to a
Bloomberg report.

Leading military aircraft producers, including
US firms Lockheed Martin and Boeing, Sweden’s Saab and France’s Dassault
Aviation, are among those likely to bid for the mega deal.

For
the potential airforce order, Boeing has tied up with Mahindra Defence
System and state-owned Hindustan Aeronautics Ltd (HAL) for producing
F/A-18 Super Hornets. It has also spent millions of dollars to create an
ecosystem around building the product in India, by building a supplier
network.

Kumar estimates that Boeing would need up to 400
suppliers to make the aircraft in India, compared with about 800
suppliers stationed in the US that help the company build the fighter
jet in that country.

“A lot of capabilities need to be created in
India to build and support the ecosystem around the aircraft (F/A-18
Super Hornet). We need test and assembly centres, which we plan to
establish with partnership with our partners. Then comes training the
crew, maintenance, providing ground support to maintain the aircraft,
modernisation and repair, engineering capabilities, which would need a
huge ecosystem, creating which is costing us millions of dollars,” Kumar
said.

The company’s investment in India to build its product
here could run into billions of dollars and would depend on the number
of aircraft the government finally decides to purchase, he said.

Boeing
has also responded to the Indian Navy’s Request for Information (RFI)
in 2017 to purchase 57 fighter jets, which is estimated to cost about
$5-6 billion, Kumar said. The company has pitched its F/A-18 Super
Hornets for the navy’s fighter jet requirements.

“The F/A-18
Super Hornet is a multi-role fighter jet and will not require change of
platform for the air force and navy. The deal size is about $6 billion,
according to the navy,” Kumar said.

“Recently, we have seen a
much more over leaning stance of US government, that makes me confident
that there will be something compelling on the table,” Kumar said.

Boeing
expects the Indian commercial aviation space to grow rapidly as more
Indians belonging to the middle class start flying, which is expected to
drive up growth for decades to come.

“The government’s regional
connectivity scheme is getting more people to fly especially from the
smaller towns and cities,” Kumar said, adding that unless something
dramatic happens like oil prices going to $150 a barrel, India’s growth
story is expected to continue.